Bank of Montreal v. The King, , 38 S.C.R. 258 (1906)

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Bank of Montreal v. The King, , 38 S.C.R. 258 (1906)

Supreme Court of Canada

Bank of Montreal v. The King, 38 S.C.R. 258

Date: 1906-02-19

The Bank of Montreal (Defendant) Appellant;

and

His Majesty, The King (Plaintiff), and The Quebec Bank, The Sovereign Bank of Canada and The Royal Bank of Canada (Third Parties) Respondents.

1906: November 12-14; 1907: February 19.

Present: Girouard, Davies, Idington, Maclennan and Duff JJ.

ON APPEAL FROM THE COURT OF APPEAL FOR ONTARIO.

Crown-Banks and banking-Forged cheques-Payment-Representation by drawee-Implied guarantee-Estoppel-Acknowledgment of bank statements-Liability of indorsers-Mistake-Action-Money had and received.

A clerk in a department of the Government of Canada, whose duty was to examine and check its account with the Bank of Montreal, forged departmental cheques and deposited them to his credit in other banks. The forgeries were not discovered until some months after these cheques had been paid by the drawee to the several other banks, on presentation, and charged against the Receiver General on the account of the department with the bank. None of the cheques were marked with the drawee's acceptance before payment. In the meantime, the accountant of the department, being deceived by false returns of checking by the clerk, acknowledged the correctness of the statements of the account as furnished by the bank where it was kept. In an action by the Crown to recover the amount so paid upon the forged cheques and charged against the Receiver General:

Held, affirming the judgment appealed from (11 Ont. L.R. 595) that the bank was liable unless the Crown was estopped from setting up the forgery.

Per Davies, Idington and Duff JJ., that estoppel could not be invoked against the crown.

Per Girouard and Maclennan JJ., that, apart from the question of the Crown being subject to estoppel, under the circumstances of this case a private person would not have been estopped had his name been forged as drawer of the cheques.

Per Davies and Idington JJ.-The acknowledgment by the accountant of the department of the correctness of the statements furnished by the bank, being made under a mistake as to the facts, the accounts could be re-opened to have the mistake rectified.

The defendant bank made claims against the other banks, as third parties, as indorsers or as having received money paid by mistake, for the reimbursement of the several amounts so paid to them, respectively. On these third party issues, it was held,

Per Girouard and Maclennan JJ.-The drawee, having paid the cheques on w...

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